Homework Answers
Net income = (Earnings before interest and taxes - Interest
expense) * (1 - Tax rate)
Net income = ($80.00 - $6.00) * (1 - 0.40)
Net income = $74.00 * 0.60
Net income = $44.40
Free cash flow to equity = Net income - Investment in total
capital + Net change in debt
Free cash flow to equity = $44.40 - $8.00 + $10.00
Free cash flow to equity = $46.40
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